Apple Unveils Latest IPad With Sharper Screen in Bid to Widen Tablet Lead

Apple Inc. (AAPL) introduced a new version of the iPad, beefing up the two-year-old mobile computer with a sharper screen and faster chip to widen its lead over Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and Google Inc. in the tablet market.

The device will cost $499 to $829 and include an A5X chip that enables better graphics, Apple said today at an event in San Francisco. It will also boast a 9.7-inch screen that has more pixels than traditional high-definition televisions and run on so-called long-term evolution, or LTE, wireless networks.

Chief Executive Officer Tim Cook is making the most significant upgrade yet to Apple’s tablet months before Microsoft introduces software that will run on competing devices. The new version is also aimed at helping the company fend off competition from Google’s Android operating system, as well as Amazon.com, whose $199 Kindle Fire is gaining traction among budget-conscious buyers.

The new iPad will be available March 16, and Apple is taking orders starting today. AT&T Inc. (T) and Verizon Wireless will be the first U.S. wireless carriers to sell the new device. Telus Corp. (T), Rogers Communications Inc. (RCI/B) and BCE Inc. (BCE) will carry the new iPad in Canada.

Shares of Cupertino, California-based Apple were little changed at $531.05 as of 1:55 p.m. in New York after the announcement.

Apple TV

The overhaul will help draw both new customers and existing owners who want new features, said Carl Howe, an analyst at Yankee Group.

Apple gets about 20 percent of its sales from the iPad, attracting consumers as well as business users. With the device’s mix of touch-screen capabilities and computing power that puts it on par with some laptops, Apple has created a new category of consumer-electronics devices.

Cook also unveiled an update of the Apple TV set-top box with a new user interface and a so-called mirroring function that lets video from a user’s mobile devices be played on TV. Photos taken from an iPhone will wirelessly synch using Apple TV. The device will cost $99 and also go on sale March 16.

According to market research firm Gartner Inc., 103.5 million tablet devices will be sold in 2012, with Apple accounting for two-thirds of those. The figure will rise to 326.3 million in 2015.

Amazon, Google Gain

The company’s share will drop to 46 percent by 2015 as Google’s Android gains customers and Microsoft enters the market.

Amazon’s Kindle Fire tablet, which went on sale in November, has emerged as Apple’s most credible competitor. Tablets introduced by Research In Motion Ltd. (RIM), Samsung Electronics Co. (005930) and Hewlett-Packard Co. (HPQ) haven’t gained much interest.

“It’s an iPad market, and then there’s everybody else,” Howe said. “They are going to be selling them as fast as they can make them.”

Amazon has been able to make some strides in the tablet market with the Kindle Fire because of its lower price, and Amazon’s website gives it a sales channel on par with Apple’s retail stores, said Sarah Rotman Epps, an analyst at Forrester Research Inc. Amazon’s selection of movies, music and applications also is appealing to customers, she said.

Microsoft’s Answer

“Tablets are about services,” said Rotman Epps. “That’s why Amazon has succeeded where others have failed.”

A new wave of tablets will be entering the market with Microsoft’s introduction of Windows 8, a remake of the company’s flagship operating system intended to work more easily with smartphones and tablets. Hewlett-Packard has said it will introduce a tablet using the software, which analysts expect will be released later this year.

While Windows 8-based products are being completed, Apple may sell 11.3 million iPads in the quarter ending March 31, more than double unit sales from a year earlier, according to Brian Marshall, an analyst at ISI Group in San Francisco. The company may sell 60 million iPads in all of 2012, ISI predicts, about 50 percent more than last year.

Apple is the largest maker of personal computers if the iPad is included in the count, according to Canalys.

Microsoft, based in Redmond, Washington, will eventually become a strong competitor, though the longer Windows 8 takes to hit the market, the harder it will be to gain traction with customers, said Rotman Epps.

Most Valuable Company

The iPad has helped make Apple the world’s most valuable company, worth $494 billion based on yesterday’s $530.26 closing stock price. Since the device went on sale in April 2010, Apple’s stock has risen 125 percent and quarterly sales have almost tripled.

One reason Apple has been able to maintain a dominant share of the tablet market is that wireless carriers don’t play as prominent a role in sales as they do with smartphones, Howe said. Customers visiting a Verizon Wireless or Sprint Nextel Corp. (S) store are often steered to a smartphone running Google Inc. (GOOG)’s Android software instead of an iPhone, he said.

Apple also benefits from its chain of more than 360 retail stores and the thousands of applications that are tailored specifically for the iPad, said Forrester’s Rotman Epps.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Photographer: David Paul Morris/Bloomberg

Tim Cook, chief executive officer of Apple Inc., in San Francisco on Mar. 7, 2012.

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Photographer: David Paul Morris/Bloomberg

Tim Cook, chief executive officer of Apple Inc., in San Francisco on Mar. 7, 2012. Close

Tim Cook, chief executive officer of Apple Inc., in San Francisco on Mar. 7, 2012.

Photographer: David Paul Morris/Bloomberg

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012. Close

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012.

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The iPad 2 at an Apple Inc. store in New York. Close

The iPad 2 at an Apple Inc. store in New York.

Photographer: David Paul Morris/Bloomberg

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012. Close

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012.

Photographer: David Paul Morris/Bloomberg

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012. Close

Phil Schiller, senior vice president of Worldwide Marketing of Apple Inc., speaks during an event in San Francisco on March 7, 2012.

Photographer: David Paul Morris/Bloomberg

Tim Cook, chief executive officer of Apple Inc., speaks during an event in San Francisco on March 7, 2012. Close

Tim Cook, chief executive officer of Apple Inc., speaks during an event in San Francisco on March 7, 2012.

Photographer: David Paul Morris/Bloomberg

Tim Cook, chief executive officer of Apple Inc., speaks during an event in San Francisco on March 7, 2012. Close

Tim Cook, chief executive officer of Apple Inc., speaks during an event in San Francisco on March 7, 2012.

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